New Business Models:

New Managerial Models

New Economy

Key Features of the New Rapidly Globalizing and Changing Knowledge Economy

 

 

"It's not the strongest nor most intelligent of the species that survive; it is the one most adaptable to change." ~ Charles Darwin

 

Three Forces Driving the New Economy

  1. Knowledge intellectual capital as a strategic factor; a set of understandings used by people to make decisions or take actions that are important to the company

  2. Change continuous, rapid and complex; generates uncertainty and reduces predictability

  3. Globalization in R&D, technology, production, trade, finance, communication and information, which has resulted in opening of economies, global hypercompetition and interdependency of business

 

New Business Models (mini-courses) Value Innovation Employee Empowerment Leader 360 Continuous Learning Fast Company New Economy: Key Feature Top 10 Forces Behind New Business Models

Today, we are living in a chaotic transition period to a new age defined by global competition, rampant change, faster flow of information and communication, increasing business complexity, and pervasive globalization. The pace of change has become so rapid that it took a different type of firms to be dominant and marked entirely new era of business.

This new environment is also characterized by "more far-reaching technological advances, and a consumer who has adjusted to this quicker pace and whose fickle preferences are revised with the speed of a television commercial."5

3Ss of Winning in Business

Surprise To Win: 3 Strategies

Business BLISS

Social Evolution: from Love to 'Like'

 

Issue

Old Industrial Economy

New Knowledge Economy

Markets

Economic Development

Steady and linear, quite predictable

Volatile - extremely fast change, with explosive upsurges and sudden downturns, and chaotic the direction of the economy's changes is not perfectly clear4

Market changes

Slow and linear

Fast and unpredictable

Economy

Supplier-driven

Customer-driven

Lifecycle of Products and Technologies

Long

Short

Key Economy Drivers

Large industrial firms

Innovative entrepreneurial knowledge-based firms

Scope of Competition

Local

Global hypercompetition

Competition: Name of the Game

Size: The big eats the small

Speed: The fast eats the slow

Marketing: Name of the Game

Mass marketing

Differentiation

Enterprise

Pace of Business

Slow

Appreciably faster with ever-rising customer expectations

Emphasis on

Stability

Change Management

Business Development Approach

Strategy pyramid: vision, mission, goals, action plans

Opportunity-driven, dynamic strategy

Success Measure

Profit

Market capitalization (the market price of an entire company)

Organization of Production

Mass production

Flexible and lean production

Key Drivers to Growth

Capital

People, knowledge, capabilities

Key Sources of Innovation

Research

Research, systemic innovation, knowledge management, integration, new business creation, venture strategies, new business models

Key Technology Drivers

Automation and mechanization

Information and communication technology, e-business, computerized design and manufacturing

Main Sources of Competitive Advantage

Access to raw materials, cheap labor, and capital for conversion; cost reduction through economies of scale

Distinctive capabilities: institutional excellence, moving with speed; human resources, customer partnership; differentiation strategies; competitive strategies

Scarce Resource

Financial capital

Human capital

Decision Making

Vertical

Distributed

Innovation Processes

Periodic, linear

Continuous, systemic innovation

Production Focus

Internal processes

Enterprise-wide business process management and entire value chain

Strategic Alliances with Other Firms

Rare, "go alone" mindset

Teaming up to add complementary resources

Organizational Structures

Hierarchical, bureaucratic, functional, pyramid structure

Interconnected subsystems, flexible, devolved, employee empowerment, flat or networked structure

Business Model

Traditional: command-and-control

New business models: refocused on people, knowledge, and coherence

Work Force

Leadership

Vertical

Shared: employee empowerment & self-leadership

Work force characteristics

Mainly male, high proportion of semi-skilled or unskilled

No gender bias; high proportion of graduates

Skills

Mono-skilled, standardized

Multi-skilled, flexible

Education Requirements

A skill or a degree

Continuous learning: It's not what you know, it's how fast you can learn

Management-Employee Relations

Confrontation

Cooperation, teamwork

Employment

Stable

Affected by market opportunity / risk factors

Employees Seen as

Expense

Investment

 

 

 

New Dimensions in Business Space

New dimensions in Business Space get constantly created. Forces like technological breakthroughs, economic growth, market evolution, shifts in customer tastes, social changes, and political events can expand or shrink Business Space. Vast amounts of new Business Space created today change perspectives. This unoccupied territory represents a land of opportunity for the technological and strategic innovators who can see or create it faster than their competitors do. The opportunities are great, but so are the competition and the chance of failure.5

Smart Business Architect

Growth Era

Today's growth era produces huge discontinuities, creates new industries and destroys old ones, and accelerates global economic growth in the process. "Expectations are rising everywhere; human creativity is flowering in every field. Emerging economies are industrializing, and everyone is joining the digital revolution of boundless information and seamless electronic commerce. The ideas, technologies, and capital to satisfy new needs flow freely."6

  Keep Your Computer-tired Eyes Healthy

Entrepreneurial Economy

New economy opens unlimited opportunities for entrepreneurial firms. In 2003 in United States, a staggering 61% of the listed companies were started at home, at the CEO's kitchen table, and 16% were initially capitalized with less than US$1,000. This is an inspiring evidence illustrating how much an entrepreneur can accomplish with an idea whose time has come.

Entrepreneurial Leader: 4 Specific Attributes

 

Venture Management Laws

for the New Rapidly Changing Economy

Technology:

If you understand it, it's obsolete.

Strategy:

If it's static, it's obsolete.

Training:

If it's certified, it's obsolete.

LEAD Learn, Experiment, Adapt, Differentiate

if you wish to win in today's hyper-competitive marketplace!

 

Increasing Complexity

Business space, technologies, processes, and business models become more complex. That is because new characteristics are added frequently, but subtracted infrequently. The dimensions of business space keep increasing, adding complexity and furnishing attractive new opportunities for those who can successfully navigate in the new environment. This complexity also inhibits greater size and greater value creation.5

Information

In the emerging era of overcommunication and hyper-competition, people are overwhelmed by choice choice of information, ideas, products, and services. Information is becoming readily available around the globe at an unprecedented pace. Customers, competitors, and innovators have instant access to each other.  Technological change, especially change in information and communication technology, delivered the Information Age and converted it to the Knowledge Age.5

Customer-driven Economy

Customer Success 360

Creating Customer Value: 9 Questions To Answer

Customer power surged as a result of the convergence of several long-developing trends. First, product and service scarcity gave way to abundance. A key reason for this is that advancing technology has dramatically increased manufacturing productivity and thereby reduced costs of entry to and expansion of many industries.

"Globalization led to more companies pursuing the same customers. At the same time, customers have become more sophisticated and informed buyers. Information technology enabled them to find and analyze competing products and to make intelligent choices. Customers discovered they had options and the power to exploit them. Customers now aggressively seek alternatives, compare offers, and hold out for the best option."7 Further, many products became virtual commodities and rapid changes in technology have dramatically shortened product life cycles. The result is a lot of similar offerings that make it very difficult for you to differentiate yourself from your competitors; this further empowers your customers. In combination, these phenomena transformed supplier-dominated economies into ones ruled by customers.7

Knowledge as the Source of Business Value

Knowledge and continuous learning are now critical elements of success. In the new economy, the knowledge component of products and services has increased dramatically in importance and has become the dominant component of customer value. The shift to knowledge as the primary source of value, makes the new economy led by those who manage knowledge effectively who create, find, and combine knowledge into new products and services faster than their competitors... More

Internet Power

The Internet changes the fundamental nature of doing business and competition. As new ways of building and delivering products and services online emerge, your competition goes beyond established competitors to include new companies, in addition to new innovations, ideas  or ways of improving existing processes or products.8

Change

Dramatic changes in competition, technology, and workforce values are causing organizations to search for new and more human ways of increasing productivity and competitiveness. The biggest changes have been due to the impact of information and communication technology. The ability to access vast information resources within a matter of minutes and to communicate across huge distances at ever lower costs and improving quality and convenience is transforming the way people and companies interact.

Why Change Fails: 8 Common Errors Leaders Make

Globalization

Globalization is not new, but today it's more rapid and pervasive. Distance is becoming a shrinking barrier. Markets are globalizing rapidly, as are the companies that compete in them. Considerable share of sales of companies come from outside the headquarters country. Geographic proximity is no longer essential for people for working together. World trade economy is growing at more than five times the rate of world gross domestic product.

Capital Markets

Capital markets have evolved significantly. New investors are more informed, innovative, and activist, and have themselves become agents of change by demanding superior performance and corporate transparency.

New Competitive Dynamics

Competition is now based more on capabilities than assets. New competitive dynamics led to greater instability in the profitability of companies. New products, services, and competitors are emerging with blinding speed. Competitive pressure has been intensifying and it is becoming harder to achieve market leadership and to stay on top.

Sustainable Competitive Advantage

New Skill Requirements

Specialized skills are increasingly required by companies, yet these skills are what makes employees more mobile in the marketplace. New skill requirements foster changes in the relationships between employers and employees. No dimension of the business environment is changing faster than the dynamics between employer and employee.

9 Signs of a Losing Organization

New Employee Relationships

The relationship between the company and its people is changing rapidly. Ever increasing emphasis on knowledge and capabilities means that people become even more important. In the rapidly changing business environment, companies cannot promise long-term employment any more. At the same time, knowledge workers have also become more mobile in the marketplace - the old-style employee loyalty is dead. Due to evolving demographics (e.g. dual career couples are the norm now), family values and personal time are at premium.

Innovation-friendly Organization

New Definitions of Value

In their book 'Blur'10, Christopher Meyer and Stan Davis describe the shape of a world in which speed, intangibles and connectivity dominate the social and economic landscape. The authors outline a number of metrics that evaluate corporate performance in the connected economy: speed to market, cycle time from idea generation to new product development, and the number of electronic connections to suppliers, customers and partners. In this new blurring world, the focus must be on the way in which the nature of value is changing, involving new ways to price goods, information and emotion.

  Keep Your Computer-tired Eyes Healthy

The implication of these new forms of exchange is a transfer of power from the producer to the customer. There are multitudes of values present in every buyer-seller exchange: economic, informational and emotional. These exchanges increasingly happen so fast that there is no time to translate them into precise monetary terms. Businesses will need to identify these hidden values and think more accurately about their worth before accepting the price proposed. The implications are profound. Companies will need to think in terms of offers, which involve merging products and services to exploit their knowledge to give customers a value-added experience, not just "selling them stuff".11

The Fun Factor

As business today is about passion and winning and creating new things, fun has become a big element in the business strategy of many highly successful businesses. No one should have a job they don't enjoy. "What's really driving the new economy and confounding the grand pooh-bahs of the old one is that individuals are having a huge impact. And an awful lot of fun," writes Edward O. Welles.9 ... More

Inspiring Culture: 5 Elements

 

 

 

References:

  1. "Extreme Management", Mark Stevens

  2. The 80/20 Principle, Richard Koch

  3. Relentless Growth, Christopher Meyer

  4. "Leading at the Edge of Chaos", Emmett C. Murphy and Mark. A. Murphy

  5. The Centerless Corporation, by Bruce A.Pasternack and Albert. J. Viscio

  6. "Every Business is a Growth Business", Ram Charan and Noel. M. Tichy

  7. Agenda, Michael Hammer

  8. "Direct from Dell", Michael Dell with Catherine Fredman

  9. "The Fun Factor", Edward O. Welles

  10. "Blur: The Speed of Change in the Connected Economy", Davis, S. and Meyer, C.

  11. "Managing Complexity", Robin Wood